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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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Hi, I am a UK citizen, living here since last 12 years along

Customer Question

Hi,
I am a UK citizen, living here since last 12 years along with my family (full time working wife and two school going kids).
I am in the process of relocating to UAE from 1st Sept 2014 onwards for next 3-4 years. However, my family will move in December 2014 and until then my wife is working here and paying taxes.

As I am going overseas during the tax year, I want to ensure that I do not get taxed for the Dubai year for this tax year either using Split year taxation or any other means, including relocation earlier than planned Sept 2014.
Could you advise if I will pay UK taxes on my UAE earnings if i leave UK on 1st Sept 2014?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.

As you leave the UK for the UAE complete a form P85 and send it to your tax office. You can do this on line. HMRC will then make you non resident for tax purposes in the tax year following the submission of the form, but in addition split the year of departure into two parts, one resident, one non resident. Once non resident you will not be taxed on income earned outside the UK. Any income generated in the UK, however, eg rents, dividends, would still be exposed to UK taxation in the normal manner. What the UAE taxation position would be I cannot give guidance upon as this site is essentially for UK tax advice.

I do hope I have helped you with your question and thrown some light on your future situation.
Customer: replied 2 years ago.

Hi Keith,


Thanks for your answer. However, the confusion is coming from following facts -


1. My wife and kids will be here in the UK until Dec 2014. Although she is in full time work and is paying taxes, could that impact my tax situation? I also have a house in the UK which I intend to rent and not keep for my own use.


 


2. I have read the split year tax rules on HMRC. But there is a mention of 91 days and 183 days max stay in the tax year. Does it apply to my situation, especially because my family will more few months later.


 


3. The HMRC rules say the following -


If during a year you either start to live or work abroad or come from abroad to live or work in the UK the tax year will be split into two parts if your circumstances meet specific criteria:
-a UK part for which you are charged to UK tax as a UK resident;
- an overseas part for which, for most purposes, you are charged to UK
tax as a non-UK resident.


 


So what does it mean by UK tax as non-UK resident?


 

Expert:  bigduckontax replied 2 years ago.
Right, you have expanded your question. All your income generated in the UK will, as I told you in my original answer, be subject to the UK taxation regime in the normal way as I told you in my original answer. That is what HMRC are getting at in their information sheet where they say 'UK tax as a non-UK resident;' not always clear their data!

Your wife's situation is an irrelevance. In UK tax law she is a separate person. Dual taxation of husband and wife went out many years ago. She should do a P85 also as she leaves, just in case.

I see you have picked up the liability to tax if you spend too much time in the UK. The essential limitation to consider is the 91 day rule. You must ensure that in each tax year you do not spend more that 91 days in the UK. This may be averaged out over a 4 year period, but experts warn that to be sure of escaping UK tax on your world wide income don't exceed the magic number.

I do hope that helps you. Please be so kind as to rate me before you leave the Just Answer site.
Customer: replied 2 years ago.

Many thanks Kieth. I will certainly leave a positive rating for your help after clarifying the point i mentioned in last email -


 


So As i picked up the 91 days limit for stay in UK in any given tax year (average of 4 years), but in current tax year, as i will leave only on Sept 1st 2014, I would have spent more than 91 days nearly 150 days. If I understood your advice correctly - that is why split year taxation comes into the picture and it does not matter in this year that if I am spending more than 91 days, as long as my 4 years average is not more than 91 days per year.


 


All i want to ensure is that having spent more than 91 days in this current tax year in UK, will not cause me to pay tax on Non-UK income, as long as I fulfill the 91 days limit in future years.


 


Many thanks for your superbly fast responses and helpful advice so far.


 


Regards


 

Expert:  bigduckontax replied 2 years ago.
The split process is exactly that, one bit of employment subject to UK taxation and the other not. Under the P85 system the 91 day rule does not kick in until the second part and is only applicable thereto.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3116
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.

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